This document provides an overview of a lecture on financial management. It discusses key concepts like the scope and goals of financial management. The lecture defines financial management as applying general management principles to financial resources. It notes the goal of financial management is to maximize shareholder wealth. The document also covers topics like the functions of a financial manager, sources of finance, and an introduction to financial markets and the efficient market hypothesis.
This document provides an overview of corporate finance and key concepts. It discusses that finance involves the transfer of money among individuals, businesses, and governments. The three main categories of finance are public finance, corporate finance, and personal finance. Corporate finance focuses on a firm's investment and financing decisions. The three main financial decisions for firms are the investment decision, financing decision, and dividend decision. The document also discusses objectives of financial management, including profit maximization and wealth/shareholder value maximization.
Importance of financial management
Overview of Financial Management
Time Value Of Money
Cost of capital
International Financial Management
Return and Risk
Valuation of financial instruments
This document summarizes the portfolio management process of Arif Habib Investments Limited, an asset management company in Pakistan. It outlines Arif Habib's 6-step portfolio management process, which includes identifying investor objectives, developing market expectations, creating investment strategies, monitoring portfolios, rebalancing as needed, and measuring performance. The document also lists the various funds and investment plans offered by Arif Habib, including 16 mutual funds, 2 pension funds, and 9 investment plans, covering both open-ended and closed-ended options.
Finance involves activities like investing, borrowing, lending, saving, budgeting and forecasting. It includes personal finance, corporate finance, and public finance. Finance grew out of economics and accounting, so people in finance need knowledge of those fields. Financial management focuses on decisions about acquiring and managing assets to maximize firm value. It involves investment, financing, and asset management decisions. Capital markets allow buyers and sellers to trade securities like stocks and bonds.
The document discusses various objectives and functions of financial management. The key objectives are profit maximization and wealth maximization. It also discusses the changing role of financial managers in areas like raising funds, investment decisions, and understanding capital markets. Additionally, it outlines the interface of financial management with other functional areas like production, materials, personnel, and marketing departments.
financial management objectives & the organization chart of financial managementMohamed Adel
Financial management drives applying general management concepts to the company's financial capital that leading to the investment decisions in such as fixed assets, current assets, and working capital, as results of that the management generates set of investment decisions to collect financing from different resources, which will depend on the type of source, the financing duration, the financing costs and the returns of the decision.
Finance is the study of how people allocate scarce resources over time. It involves evaluating uncertain cash flows probabilistically and making investment and financing decisions. The goal of corporate finance is to maximize shareholder wealth by making optimal investment and financing decisions. This involves choosing investments that earn returns above the cost of capital and using a mix of financing that minimizes risk and cost. Key measures include economic value added and net present value. The finance function exists to transform assets and create value through financial contracting and markets.
1. Financial management concerns the acquisition, financing, and management of assets with the overall goal of maximizing shareholder wealth.
2. There are three primary financial decisions: investment decisions about what assets to hold, financing decisions about how to pay for assets, and asset management decisions about efficiently managing existing assets.
3. The objectives of financial management include maximizing profits, returns, and shareholder wealth through effective investment, financing, and dividend decisions.
This document provides an overview of corporate finance and key concepts. It discusses that finance involves the transfer of money among individuals, businesses, and governments. The three main categories of finance are public finance, corporate finance, and personal finance. Corporate finance focuses on a firm's investment and financing decisions. The three main financial decisions for firms are the investment decision, financing decision, and dividend decision. The document also discusses objectives of financial management, including profit maximization and wealth/shareholder value maximization.
Importance of financial management
Overview of Financial Management
Time Value Of Money
Cost of capital
International Financial Management
Return and Risk
Valuation of financial instruments
This document summarizes the portfolio management process of Arif Habib Investments Limited, an asset management company in Pakistan. It outlines Arif Habib's 6-step portfolio management process, which includes identifying investor objectives, developing market expectations, creating investment strategies, monitoring portfolios, rebalancing as needed, and measuring performance. The document also lists the various funds and investment plans offered by Arif Habib, including 16 mutual funds, 2 pension funds, and 9 investment plans, covering both open-ended and closed-ended options.
Finance involves activities like investing, borrowing, lending, saving, budgeting and forecasting. It includes personal finance, corporate finance, and public finance. Finance grew out of economics and accounting, so people in finance need knowledge of those fields. Financial management focuses on decisions about acquiring and managing assets to maximize firm value. It involves investment, financing, and asset management decisions. Capital markets allow buyers and sellers to trade securities like stocks and bonds.
The document discusses various objectives and functions of financial management. The key objectives are profit maximization and wealth maximization. It also discusses the changing role of financial managers in areas like raising funds, investment decisions, and understanding capital markets. Additionally, it outlines the interface of financial management with other functional areas like production, materials, personnel, and marketing departments.
financial management objectives & the organization chart of financial managementMohamed Adel
Financial management drives applying general management concepts to the company's financial capital that leading to the investment decisions in such as fixed assets, current assets, and working capital, as results of that the management generates set of investment decisions to collect financing from different resources, which will depend on the type of source, the financing duration, the financing costs and the returns of the decision.
Finance is the study of how people allocate scarce resources over time. It involves evaluating uncertain cash flows probabilistically and making investment and financing decisions. The goal of corporate finance is to maximize shareholder wealth by making optimal investment and financing decisions. This involves choosing investments that earn returns above the cost of capital and using a mix of financing that minimizes risk and cost. Key measures include economic value added and net present value. The finance function exists to transform assets and create value through financial contracting and markets.
1. Financial management concerns the acquisition, financing, and management of assets with the overall goal of maximizing shareholder wealth.
2. There are three primary financial decisions: investment decisions about what assets to hold, financing decisions about how to pay for assets, and asset management decisions about efficiently managing existing assets.
3. The objectives of financial management include maximizing profits, returns, and shareholder wealth through effective investment, financing, and dividend decisions.
1 the role of managerial finance(modified 4)Ahmed Elgazzar
1-The Role of Managerial Finance(Modified 4)
2-Time value of money(modified 1)
3-Capital Budgeting(Modified 1) [Repaired]
4-Stock Valuation(modified 1)
MBA Assignments
This chapter provides an overview of key concepts in financial management. It discusses the goals of financial management, including maximizing shareholder wealth. It also covers various sources of financing for firms, both internal sources like retained earnings and depreciation, as well as external sources such as debt and equity. Additionally, it discusses different types of financial markets, including money markets for short-term debt and capital markets for long-term securities like stocks and bonds. The chapter aims to introduce students to core topics in financial management.
This document provides an overview of financial management. It begins by defining financial management and its objectives, which include ensuring adequate and regular funds, adequate returns for shareholders, optimum fund utilization, safety of investments, and a sound capital structure.
The document then outlines the key elements and functions of financial management. The elements include investment decisions, financial decisions, and dividend decisions. The functions include estimating capital requirements, determining capital composition, choosing sources of funds, investing funds, disposing of surplus funds, managing cash, and exercising financial controls.
The document also discusses topics such as investment decision making, financial decisions, dividend decisions, liquidity decisions, project appraisal, and working capital management. It provides details on various tools and
The document discusses the key concepts of financial management. It defines financial management as planning, organizing, and controlling financial activities such as procuring and using funds. The four main functions of financial management are discussed as:
1) Investment decisions, which involve capital budgeting and determining asset allocation.
2) Financing decisions, which involve determining optimal capital structure and sources of long-term financing.
3) Dividend decisions, which involve determining how much profits to distribute vs retain.
4) Working capital management, which involves managing day-to-day finances like collections and payments. The goal of financial management is to maximize the value of the firm.
The capital structure refers to the mix of long-term financing sources like equity shares, preference shares, debentures and retained earnings. It is the permanent financing of the company. The financial structure includes both long-term and short-term sources of financing and represents the entire liabilities side of the balance sheet, while the capital structure only includes long-term sources. Determining the optimal capital structure is important as it impacts the value and risk of the firm.
The document provides an overview of financial management concepts including the meaning, nature, scope and objectives of financial management. It discusses the organizational structure of a finance department and key responsibilities of a financial manager such as capital budgeting, investment decisions, and cash management. The document also covers understanding capital markets, related disciplines like finance and accounting, components and major differences between the old and new formats of a balance sheet as per Indian accounting standards. In summary, the document serves as an introductory guide to basic concepts in the field of financial management.
Corporate finance refers to planning, developing and controlling the capital structure of a business to increase organizational value and profit through optimal decisions on investments, finances and dividends. It focuses on acquiring, managing and allocating financial resources such as capital to meet the funding needs of a business. The key functions of corporate finance include investment decisions, financing decisions, and dividend decisions which are interrelated and aim to maximize shareholder wealth.
This document provides an overview of financial management. It defines key terms like accounting, financial management, and their various roles. It describes the goals of financial management as maximizing profits and shareholder wealth. It also outlines the major activities of businesses including financing, operating, and investing activities. Finally, it discusses the major areas of financial decision making for firms, including investment decisions, financing decisions, asset management, liquidity decisions, and dividend decisions.
This document provides an introduction to principles of finance. It defines finance as the art and science of managing money, which deals with transferring money among individuals, businesses, and governments. Finance focuses on investment in real assets like land and financial assets like savings accounts. The benefits of understanding finance include various career opportunities in fields like corporate financial management, stockbroking, and investment consulting. Major areas of finance include financial services and managerial finance. Financial managers perform tasks like financial planning, investment decision making, financing decisions, and maintaining accounting records and controls. Their goal is to maximize shareholder wealth by considering stakeholders and factors like risk, timing of returns, and cash flows. Agency problems can arise between owners and managers, so various mechanisms are
The document discusses key concepts in finance including the roles of a financial manager, business forms, goals of the firm, and financial markets and institutions. Specifically, it defines the roles of a financial manager, compares basic business forms like sole proprietorships, partnerships and corporations, explains that the goal of the firm is to maximize shareholder wealth, and outlines the money market, capital market, and how securities are issued in primary and secondary markets.
This document provides an introduction to finance, covering key topics such as defining finance, the evolution of finance, the finance function, the firm's goal of maximizing shareholder wealth, the role of financial managers, financial markets and systems, and agency theory. It discusses how finance exists to create value by substituting financial wealth for real assets. The role of financial managers is described as making investment, financing, dividend, and liquidity decisions. Agency theory addresses potential conflicts of interest between managers and shareholders.
Financial Management — objectives — profit maximization, wealth maximization — finance function — role of finance manager — strategic financial management — economic value added — time value of money.
The PowerPoint presentation covers key concepts in financial management including:
- Definitions of finance and financial management from various authors.
- The nature and scope of financial management, including the functions of investment, financing, and dividend decisions.
- The objectives of financial management including maximization of profits, returns, and shareholder wealth.
- Key concepts in investment decisions like risk-return tradeoff, discounting and present value calculations.
- Other important financial concepts covered include cost of capital, capital budgeting techniques, and valuation of annuities, perpetuities and growing cash flows.
conceptual learning for FM Unit-1-1.pptxssusera156cd
This document provides an overview of essential concepts in financial management. It begins by defining key terms like finance, financial management, and objectives of financial management such as maximizing profits, returns, and wealth.
It then covers major functions of financial management like investment decisions, financing decisions, dividend decisions, and liquidity decisions. Specific topics discussed include risk-return tradeoff, time value of money concepts like present and future values, and discounting and compounding.
The roles and responsibilities of a financial manager are also summarized, which include raising funds, allocating funds, profit planning, and understanding capital markets. Finally, the document outlines the scope of financial management and its relationship to disciplines like economics, accounting, and mathematics
Defination of Financial Management
Major Areas
Corporates
Corporate Structure
Corporate Objectives & Strategy
Factors influencing Corporate Objectives
Primary vs Secondary Objectives
Strategies(Corporate) / Tactical (Functional)
Role Of a Financial Manager
The document discusses key topics in corporate finance including maximizing shareholder wealth, evaluating investment projects, valuing companies, mergers and acquisitions, corporate governance, and analyzing corporate financial statements. It also discusses the objective of corporate finance as maximizing shareholder value and the potential issues that can arise when manager and shareholder interests are not aligned.
This document provides an introduction to managerial economics. It defines managerial economics as the application of economic theory and methods to business decision-making. The scope of managerial economics is broader than business economics as it deals with decision problems of both business and non-business organizations. Managerial economics uses both microeconomic and macroeconomic analysis to solve organizational problems. It considers factors like profit maximization, costs, revenues, and demand analysis. Firms aim to maximize profits but may also consider other objectives like long-term value and social responsibility.
This document defines financial management and its key objectives. Financial management involves planning, organizing, and controlling a company's financial resources and activities. One of the main objectives of financial management is wealth maximization for shareholders over the long term by maximizing share price through earnings and dividends. However, profit maximization alone is an imperfect objective, as it ignores risk, the time value of money, and a company's social responsibilities. The document discusses alternative approaches and key functions of financial management.
This document provides an overview of financial management concepts including the financial goals of profit and wealth maximization. It discusses the finance functions of investment, financing, and dividend decisions. The costs of capital such as cost of debt, preferred stock, equity, and retained earnings are explained. The document also covers topics such as the scope of financial management decisions, organization of the finance function, financial planning process, sources of funds, and concepts of financing decisions, capitalization, capital structure, and financial structure. Determinants that influence a company's capital structure are also outlined.
This document outlines key topics in foundations of finance including:
- The meaning and definition of finance as the system of creating, circulating, and managing money as a medium of exchange.
- The scope and objectives of financial management including investment decisions, financing decisions, and dividend decisions.
- The importance of financial management in strategic planning, decision making, controlling, and maximizing profits.
- Several principles of finance such as the risk-return tradeoff, time value of money, importance of cash flow over profits, benefits of diversification, influence of taxes on decisions, and importance of liquidity.
The document discusses quality assurance (QA) at Sunyani Technical University (STU) in Ghana. It outlines the background and importance of QA for universities. It describes STU's stakeholders in quality and the stages of its QA process. Specific QA activities at STU include course evaluations, admissions verification, and accreditation support. Benefits of effective QA include improved performance, satisfaction, and institutional reputation. Challenges include late exam submissions and delays in accreditation documentation. The conclusion emphasizes that QA is STU's responsibility and requires cooperation across the university.
This document discusses how to build trust in relationships. It emphasizes being transparent by being easily readable, open, and vulnerable. It also stresses the importance of being responsive by giving and receiving feedback graciously. Additionally, it recommends using caring by showing others they are important and respecting them. The document also advises being sincere so your words and actions match, and being trustworthy by keeping your agreements. Overall, it provides guidance for establishing trust through open communication and reliability.
1 the role of managerial finance(modified 4)Ahmed Elgazzar
1-The Role of Managerial Finance(Modified 4)
2-Time value of money(modified 1)
3-Capital Budgeting(Modified 1) [Repaired]
4-Stock Valuation(modified 1)
MBA Assignments
This chapter provides an overview of key concepts in financial management. It discusses the goals of financial management, including maximizing shareholder wealth. It also covers various sources of financing for firms, both internal sources like retained earnings and depreciation, as well as external sources such as debt and equity. Additionally, it discusses different types of financial markets, including money markets for short-term debt and capital markets for long-term securities like stocks and bonds. The chapter aims to introduce students to core topics in financial management.
This document provides an overview of financial management. It begins by defining financial management and its objectives, which include ensuring adequate and regular funds, adequate returns for shareholders, optimum fund utilization, safety of investments, and a sound capital structure.
The document then outlines the key elements and functions of financial management. The elements include investment decisions, financial decisions, and dividend decisions. The functions include estimating capital requirements, determining capital composition, choosing sources of funds, investing funds, disposing of surplus funds, managing cash, and exercising financial controls.
The document also discusses topics such as investment decision making, financial decisions, dividend decisions, liquidity decisions, project appraisal, and working capital management. It provides details on various tools and
The document discusses the key concepts of financial management. It defines financial management as planning, organizing, and controlling financial activities such as procuring and using funds. The four main functions of financial management are discussed as:
1) Investment decisions, which involve capital budgeting and determining asset allocation.
2) Financing decisions, which involve determining optimal capital structure and sources of long-term financing.
3) Dividend decisions, which involve determining how much profits to distribute vs retain.
4) Working capital management, which involves managing day-to-day finances like collections and payments. The goal of financial management is to maximize the value of the firm.
The capital structure refers to the mix of long-term financing sources like equity shares, preference shares, debentures and retained earnings. It is the permanent financing of the company. The financial structure includes both long-term and short-term sources of financing and represents the entire liabilities side of the balance sheet, while the capital structure only includes long-term sources. Determining the optimal capital structure is important as it impacts the value and risk of the firm.
The document provides an overview of financial management concepts including the meaning, nature, scope and objectives of financial management. It discusses the organizational structure of a finance department and key responsibilities of a financial manager such as capital budgeting, investment decisions, and cash management. The document also covers understanding capital markets, related disciplines like finance and accounting, components and major differences between the old and new formats of a balance sheet as per Indian accounting standards. In summary, the document serves as an introductory guide to basic concepts in the field of financial management.
Corporate finance refers to planning, developing and controlling the capital structure of a business to increase organizational value and profit through optimal decisions on investments, finances and dividends. It focuses on acquiring, managing and allocating financial resources such as capital to meet the funding needs of a business. The key functions of corporate finance include investment decisions, financing decisions, and dividend decisions which are interrelated and aim to maximize shareholder wealth.
This document provides an overview of financial management. It defines key terms like accounting, financial management, and their various roles. It describes the goals of financial management as maximizing profits and shareholder wealth. It also outlines the major activities of businesses including financing, operating, and investing activities. Finally, it discusses the major areas of financial decision making for firms, including investment decisions, financing decisions, asset management, liquidity decisions, and dividend decisions.
This document provides an introduction to principles of finance. It defines finance as the art and science of managing money, which deals with transferring money among individuals, businesses, and governments. Finance focuses on investment in real assets like land and financial assets like savings accounts. The benefits of understanding finance include various career opportunities in fields like corporate financial management, stockbroking, and investment consulting. Major areas of finance include financial services and managerial finance. Financial managers perform tasks like financial planning, investment decision making, financing decisions, and maintaining accounting records and controls. Their goal is to maximize shareholder wealth by considering stakeholders and factors like risk, timing of returns, and cash flows. Agency problems can arise between owners and managers, so various mechanisms are
The document discusses key concepts in finance including the roles of a financial manager, business forms, goals of the firm, and financial markets and institutions. Specifically, it defines the roles of a financial manager, compares basic business forms like sole proprietorships, partnerships and corporations, explains that the goal of the firm is to maximize shareholder wealth, and outlines the money market, capital market, and how securities are issued in primary and secondary markets.
This document provides an introduction to finance, covering key topics such as defining finance, the evolution of finance, the finance function, the firm's goal of maximizing shareholder wealth, the role of financial managers, financial markets and systems, and agency theory. It discusses how finance exists to create value by substituting financial wealth for real assets. The role of financial managers is described as making investment, financing, dividend, and liquidity decisions. Agency theory addresses potential conflicts of interest between managers and shareholders.
Financial Management — objectives — profit maximization, wealth maximization — finance function — role of finance manager — strategic financial management — economic value added — time value of money.
The PowerPoint presentation covers key concepts in financial management including:
- Definitions of finance and financial management from various authors.
- The nature and scope of financial management, including the functions of investment, financing, and dividend decisions.
- The objectives of financial management including maximization of profits, returns, and shareholder wealth.
- Key concepts in investment decisions like risk-return tradeoff, discounting and present value calculations.
- Other important financial concepts covered include cost of capital, capital budgeting techniques, and valuation of annuities, perpetuities and growing cash flows.
conceptual learning for FM Unit-1-1.pptxssusera156cd
This document provides an overview of essential concepts in financial management. It begins by defining key terms like finance, financial management, and objectives of financial management such as maximizing profits, returns, and wealth.
It then covers major functions of financial management like investment decisions, financing decisions, dividend decisions, and liquidity decisions. Specific topics discussed include risk-return tradeoff, time value of money concepts like present and future values, and discounting and compounding.
The roles and responsibilities of a financial manager are also summarized, which include raising funds, allocating funds, profit planning, and understanding capital markets. Finally, the document outlines the scope of financial management and its relationship to disciplines like economics, accounting, and mathematics
Defination of Financial Management
Major Areas
Corporates
Corporate Structure
Corporate Objectives & Strategy
Factors influencing Corporate Objectives
Primary vs Secondary Objectives
Strategies(Corporate) / Tactical (Functional)
Role Of a Financial Manager
The document discusses key topics in corporate finance including maximizing shareholder wealth, evaluating investment projects, valuing companies, mergers and acquisitions, corporate governance, and analyzing corporate financial statements. It also discusses the objective of corporate finance as maximizing shareholder value and the potential issues that can arise when manager and shareholder interests are not aligned.
This document provides an introduction to managerial economics. It defines managerial economics as the application of economic theory and methods to business decision-making. The scope of managerial economics is broader than business economics as it deals with decision problems of both business and non-business organizations. Managerial economics uses both microeconomic and macroeconomic analysis to solve organizational problems. It considers factors like profit maximization, costs, revenues, and demand analysis. Firms aim to maximize profits but may also consider other objectives like long-term value and social responsibility.
This document defines financial management and its key objectives. Financial management involves planning, organizing, and controlling a company's financial resources and activities. One of the main objectives of financial management is wealth maximization for shareholders over the long term by maximizing share price through earnings and dividends. However, profit maximization alone is an imperfect objective, as it ignores risk, the time value of money, and a company's social responsibilities. The document discusses alternative approaches and key functions of financial management.
This document provides an overview of financial management concepts including the financial goals of profit and wealth maximization. It discusses the finance functions of investment, financing, and dividend decisions. The costs of capital such as cost of debt, preferred stock, equity, and retained earnings are explained. The document also covers topics such as the scope of financial management decisions, organization of the finance function, financial planning process, sources of funds, and concepts of financing decisions, capitalization, capital structure, and financial structure. Determinants that influence a company's capital structure are also outlined.
This document outlines key topics in foundations of finance including:
- The meaning and definition of finance as the system of creating, circulating, and managing money as a medium of exchange.
- The scope and objectives of financial management including investment decisions, financing decisions, and dividend decisions.
- The importance of financial management in strategic planning, decision making, controlling, and maximizing profits.
- Several principles of finance such as the risk-return tradeoff, time value of money, importance of cash flow over profits, benefits of diversification, influence of taxes on decisions, and importance of liquidity.
The document discusses quality assurance (QA) at Sunyani Technical University (STU) in Ghana. It outlines the background and importance of QA for universities. It describes STU's stakeholders in quality and the stages of its QA process. Specific QA activities at STU include course evaluations, admissions verification, and accreditation support. Benefits of effective QA include improved performance, satisfaction, and institutional reputation. Challenges include late exam submissions and delays in accreditation documentation. The conclusion emphasizes that QA is STU's responsibility and requires cooperation across the university.
This document discusses how to build trust in relationships. It emphasizes being transparent by being easily readable, open, and vulnerable. It also stresses the importance of being responsive by giving and receiving feedback graciously. Additionally, it recommends using caring by showing others they are important and respecting them. The document also advises being sincere so your words and actions match, and being trustworthy by keeping your agreements. Overall, it provides guidance for establishing trust through open communication and reliability.
- A corporation is a separate legal entity owned by shareholders that allows for easier transfer of ownership, greater capital raising potential, and lower legal liability compared to sole proprietorships or partnerships. However, corporations are subject to unfavorable tax treatment.
- Internal and external users of financial information include managers, investors, regulatory agencies, tax authorities, customers, creditors, and labor unions. Internal users ask questions about cash flow and costs/profits, while external users ask about earnings, financial position, and ability to pay obligations.
- Business activities are categorized as financing, investing, and operating. Financing involves borrowing or selling stock. Investing obtains resources to operate. Operating is the primary business activity of selling goods/
The discounted payback period is 3 years. In year 3, the cumulative discounted cash flows of $3,636 + $3,719 + $7,513 = $14,868 exceeds the initial investment of $10,000.
This document provides an overview of cost-volume-profit (CVP) analysis and break-even analysis. It defines break-even as the point where total revenue equals total costs, and neither profit nor loss is made. Break-even analysis determines the sales volume needed for a product or service to cover its costs. The document discusses using break-even analysis to measure profit and losses at different production levels, and to predict the effects of changes in sales price, costs, and efficiency. It also covers the assumptions, uses, and limitations of break-even analysis, as well as different methods for conducting the analysis.
This document provides an overview of a lecture on management accounting and cost concepts. It defines management accounting and distinguishes it from financial accounting. It covers basic terms in management accounting like unit cost. It identifies the three basic manufacturing cost categories as direct materials, direct labor, and manufacturing overhead. It discusses classifying costs by behavior as variable, fixed or mixed costs. It also covers other cost classifications like by traceability, function, and relevance to decision making.
This document discusses relevant cost analysis for decision making, specifically regarding special orders. It provides an example of a company that receives a special order and must determine whether to accept or reject it. The company's normal production and costs are presented. To determine if the special order should be accepted, only differential revenues and costs are considered - fixed costs that do not change and normal revenues and costs are ignored. The analysis shows accepting the special order would increase total contribution margin and profit. Therefore, based on financial factors alone, the company should accept the special order.
Here is a graphical representation of the break even analysis using the data provided:
Units Sold
Fixed costs = $5000
Variable cost per unit = $3
Selling price per unit = $5
Total Costs
$5000
$15000
$25000
Total Revenue
$0
$2500
$5000
$7500
$10000
$12500
$15000
$17500
$20000
$22500
Break Even Point
800 units
The break even point is reached at 800 units where total revenue equals total costs. The total fixed costs line is drawn horizontally at $5000. The total costs line is drawn starting from the total fixed costs line
This document provides guidance on how to write a literature review. It defines what a literature review is, explains why it is important, and outlines the key steps to writing an effective literature review, including selecting a topic, searching relevant literature, analyzing and critically evaluating the literature, managing references, and structuring the review. The document emphasizes that a literature review surveys and synthesizes previous scholarly work on a topic in order to demonstrate familiarity with the research and convince the reader that the topic warrants further examination.
This document summarizes key points from a lecture on regulation and legal matters related to auditing. It discusses an auditor's responsibilities regarding non-compliance with laws and regulations discovered during an audit. It also explains the expectation gap in auditing and the different types of gaps that can exist. The document outlines management and auditor responsibilities for compliance with laws and regulations. It provides examples of accounting scandals and the Sarbanes-Oxley Act. It also summarizes potential sources of legal liability for auditors, defenses auditors can use against lawsuits, and actions the auditing profession and individual accountants can take to reduce exposure to lawsuits.
The document provides an overview of audit planning and risk assessment according to ISA 300. It defines an audit plan as a list of procedures to gather evidence for an audit opinion. The objectives of adequate planning are to identify potential problems, carry out work efficiently, ensure the right staff and skills, coordinate with other parties, and facilitate supervision and review. Understanding the entity involves its nature, risks, regulations, accounting policies, objectives, strategies, controls, and financial performance. Risks include business risks like strategic, compliance, financial, and operational risks, which can lead to risks of material misstatement. Audit risk is the risk of an inappropriate audit opinion and depends on inherent, control, and detection risk. Detection risk can be reduced through
Stakeholder management involves identifying stakeholders, understanding their needs and interests, and building relationships to manage their impact and support. There are several models for classifying and prioritizing stakeholders. The salience model considers a stakeholder's power, legitimacy, and urgency to determine their importance. Stakeholders can be supportive, mixed blessing, nonsupportive, or marginal depending on their potential for threat or cooperation. Management strategies include involvement, collaboration, defense, and monitoring based on a stakeholder's assessment. The stakeholder typology model categorizes stakeholders as dormant, latent, demanding, dominant, dangerous, dependent, definitive or non-stakeholders based on their varying levels of power, legitimacy and urgency.
The document provides an overview of regulation and legal matters related to advanced audit and assurance. It discusses the definition and need for assurance regarding financial and operational information. The key elements of an assurance engagement are identified as having a three party relationship, appropriate subject matter, suitable criteria, sufficient evidence, and a written report. Auditing is defined as the independent examination and expression of an opinion on financial statements. Auditor independence and professional skepticism are important concepts. The expectation gap in auditing and ways to bridge it, such as through education, are also examined.
This document discusses whistleblowers and considerations for whistleblowing. A whistleblower is someone who exposes wrongdoing, such as fraud or corruption, occurring within an organization. Common reasons for reluctance to blow the whistle include fear of retaliation from management or coworkers, distrust that action will be taken or confidentiality kept, and not wanting to go against the team. The document also notes that most whistleblowers report issues internally up to two times, and that the majority of whistleblowers report facing no response or action regarding the wrongdoing they exposed.
Clover Corporation's financial statements for 2015 and 2014 were analyzed using horizontal analysis, common-size statements, and trend analysis. The key findings were:
- Sales increased 8.3% but net income decreased 21.9% due to rising costs of goods sold (14.3% increase) and operating expenses (2.1% increase) outpacing revenue growth.
- Common-size statements showed cost of goods sold rising to 69.2% of sales in 2015 from 65.6% in 2014 further squeezing profits.
- Trend analysis identified costs of goods sold increasing faster than sales over time, slowing the rise in gross margin.
Dr. Kwame Oduro Amoako holds several degrees including a PhD in Accounting from the University of Canterbury, New Zealand. He is currently a Senior Lecturer at the Department of Accountancy and Deputy Director for the Quality Assurance and Academic Planning Directorate at Sunyani Technical University in Ghana. His research and teaching interests include sustainability reporting, auditing, accounting education, and entrepreneurship. He has over 18 peer-reviewed publications and has presented research at several international conferences in countries like the UK, South Africa, China, and New Zealand.
This document provides background information on a research proposal that will examine the impact of corporate social responsibility (CSR) practices on employee motivation at Newmont Ahafo Mines in Ghana. It discusses literature showing relationships between CSR and stakeholder management as well as CSR and employee motivation. The study aims to address gaps in knowledge by providing empirical evidence on how CSR impacts intrinsic and extrinsic motivation. It also examines the effect of CSR at multiple organizational levels and considers external factors. The objectives are to examine CSR practices and factors motivating employees at Newmont Ahafo Mines, then measure the effect of CSR on employee motivation and identify CSR-related challenges affecting motivation.
The lecture discusses the time value of money and financial calculations. It introduces key concepts like present value, future value, and annuities. Students will learn to calculate the future and present value of single deposits and streams of cash flows using formulas and tables. They will also learn to distinguish between ordinary annuities and annuities due, and build amortization schedules for loans. Examples are provided to demonstrate calculations for present value, future value, and ordinary annuities.
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...my Pandit
Dive into the steadfast world of the Taurus Zodiac Sign. Discover the grounded, stable, and logical nature of Taurus individuals, and explore their key personality traits, important dates, and horoscope insights. Learn how the determination and patience of the Taurus sign make them the rock-steady achievers and anchors of the zodiac.
Part 2 Deep Dive: Navigating the 2024 Slowdownjeffkluth1
Introduction
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2. Key Concepts and Skills
To understand what financial management is about
To know the scope of financial management
To know the basic types of financial management
decisions and the role of the financial manager
To understand the goal of financial management
To be aware of the sources of finance
To understand financial markets and financial
instruments
Dr. Kwame O. Amoako
3. Financial Management?
Finance, according to Maness (1988) is the
study of acquisition and investment of cash
for the purpose of enhancing value and
wealth.
Management: achieving organizational
objectives by performing the planning,
organizing, leading and controlling
functions.
Dr. Kwame O. Amoako
4. Financial Management?
Applying general management principles to financial
resources of the enterprise.
Financial Management means planning, organizing, directing
and controlling the financial activities such as procurement
and utilization of funds of the enterprise.
It also refers to the efficient and effective management of
money (funds) in such a manner that accomplishes the
objectives of the organization.
Dr. Kwame O. Amoako
6. Scope of Financial Management
Financial decisions - They relate to the raising of finance from
various resources which will depend upon decision on type of source,
period of financing, cost of financing and the returns thereby.
Investment decisions includes investment in fixed assets (called as
capital budgeting). Investment in current assets are also a part of
investment decisions called as working capital decisions.
Dividend decisions - The finance manager has to take decision with
regards to the net profit distribution. Net profits are generally divided
into two:
Dividend for shareholders- Dividend and the rate of it has to be decided.
Retained profits- Amount of retained profits has to be finalized which will
depend upon expansion and diversification plans of the enterprise.
Dr. Kwame O. Amoako
7. Functions of a Financial Manager cont.
Estimation of capital requirements: A finance manager has to make
estimation with regards to capital requirements of the company. This
will depend upon expected costs and profits and future programmes
and policies of a concern.
Determination of capital composition: Once the estimation have
been made, the capital structure have to be decided. This involves
short- term and long- term debt equity analysis.
Choice of sources of funds: For additional funds to be procured, a
company has many choices like-
Issue of shares and debentures
Loans to be taken from banks and financial institutions
Public deposits to be drawn like in form of bonds.
Dr. Kwame O. Amoako
8. Functions of a Financial Manager cont.
Investment of funds: The finance manager has to
decide to allocate funds into profitable ventures so that
there is safety on investment and regular returns is
possible.
Disposal of surplus: The net profits decision have to be
made by the finance manager. This can be done in two
ways:
Dividend declaration - It includes identifying the
rate of dividends and other benefits like bonus.
Retained profits - The volume has to be decided
which will depend upon expansional, innovational,
diversification plans of the company.
Dr. Kwame O. Amoako
9. Functions of Financial Manager cont.
Management of cash: Cash is required for many
purposes like payment of wages and salaries,
payment of electricity and water bills, payment to
creditors, meeting current liabilities, purchase of
raw materials, etc.
Financial controls: The finance manager has not
only to plan, procure and utilize the funds but he
also has to exercise control over finances. This can
be done through many techniques like ratio
analysis, financial forecasting, cost and profit
control, etc.
Dr. Kwame O. Amoako
10. ALL MANAGERS ARE FINANCIAL MANAGERS
The engineer, who proposes a new plant, shapes the investment policy of the
firm
The procurement manager influences the level of investment in inventories
The Marketing manager has a say in the determination of the receivables
policy
The production manager contributes to credit policies.
The Human resource manager also determines who is to be hired at what cost
to the company.
NOTE: Departmental managers, in general, are important links in the finance control system of the
firm
Dr. Kwame O. Amoako
13. Shortcomings of these
objectives
These goals are either associated with increasing
profitability or reducing risk. E.g.
Profit maximization; Profit figures can be manipulated.
o short term profits are maximized at the expense of
long term highly profitable investments.
o Managers of a business may resort to unhealthy
practices and manipulations such as reducing
operating expenses by cutting research and
development expenditure, staff training and
development.
Dr. Kwame O. Amoako
14. Shortcomings of these
General Goals cont.
Sales/Market share maximization
o Goods can be sold at a cheaper prices or at
a loss to maximize market shares
o Sales maximization, taken to the extreme,
can lead to overtrading, and even
bankruptcy.
So it is necessary to find a goal that can
encompass both profitability and risk.
Dr. Kwame O. Amoako
15. The Real Goal of the
Firm
Maximization of
Shareholder Wealth!
Dr. Kwame O. Amoako
16. What is shareholders wealth?
Shareholders’ wealth can be measured as
the current value per share of existing
shares.
The shareholders wealth maximization
objective is to maintain highest market
value of shares.
Shareholder wealth is calculated as the
number of common shares outstanding
times the market price per share.
17. Wealth maximization Vrs other corporate
objectives
The goal of shareholder wealth maximization
is a long-term goal, and takes risk
into account.
In order to increase shareholders wealth
entities invest in long term projects highly
profitable ventures.
The pursuance of shareholder
wealth maximization as an objective removes
the technical limitations of profit
maximization.
Dr. Kwame O. Amoako
18.
19. Introduction to Financial Markets
Any marketplace where trading of
securities including equities, bonds,
currencies and derivatives occur.
It acts as an intermediary between the
savers and investors by mobilising funds
between them.
It plays a crucial role in allocating limited
resources, in the country’s economy.
Dr. Kwame O. Amoako
22. Summary of Classification of
Financial Markets
Classification by nature.
Debt market; Equity market
Classification by maturity.
Money market; Capital market
Classification by season.
Primary market; Secondary market
Etc.
Dr. Kwame O. Amoako
23. Classification by nature
The debt market
the market where debt instruments are traded.
Debt instruments are assets that require a fixed
payment to the holder, usually with interest.
Examples of debt instruments include bonds
(government or corporate) and mortgages.
The equity market
(often referred to as the stock market) is the market
for trading equity instruments. An example of an
equity instrument would be common stock shares,
such as those traded on the New York Stock
Exchange.
Dr. Kwame O. Amoako
24. Sli
de
24
Classification by maturity
A capital market
A capital market is a financial market in which long-term debt (over a
year) or equity securities are bought and sold.
Capital markets channel the wealth of savers to those who can put it to
long-term productive use, such as companies or governments making
long-term investments
Money market
Market for short-term funds, Securities with maturities from one day up
to one year are issued and traded in the money market
The purpose of the money market is to enable institutions and
companies to meet short-term funding needs by borrowing and
lending each other.
E.g., certificates of deposits, treasury bills, and commercial papers.
Capital market includes
Dr. Kwame O. Amoako
25. Classification by season
Primary Markets
Market for issuing a new
securities
Investment Banks—
Information and marketing
specialists for newly issued
securities.
Secondary Markets
Market where existing
securities can be
exchanged
Ghana Stock Exchange
New York Stock Exchange
American Stock Exchange
Conceptual
distinction:
Selling of new
securities in
primary market
and trading of
older securities
in secondary
market occur
simultaneously.
Dr. Kwame O. Amoako
26. Financial Institutions
The three types of financial institutions in Ghana:
Commercial
Banks
Savings and
Loan
Associations
Credit
Unions
27. Efficient Market Hypothesis
In an efficient capital market, security prices fairly
priced based on market available information
In other words, the market quickly and correctly
adjusts to new information
Efficient-Market Hypothesis (EMH)-hypothesis used to
test whether the capital market is efficient
The Efficient Markets Hypothesis (EMH) is made up
of three progressively stronger forms:
Strong Form
Semi-strong Form
Weak Form
28. How stock prices changes
Good news Vs Bad news are directly related to stock prices
Good income statement or sales report in theory comes with
rise in stock prices
29. Strong form efficiency:
At any one time, anyone and everyone knows
about all relevant information about the stock
The strong form says that prices fully reflect all
information, whether publicly available or not (
including inside information)
Even the knowledge of material, non-public
information cannot be used to earn superior
results.
No investor can earn excess returns using any
information, whether or not publicly available.
Most studies have found that the markets are not
efficient in this sense. Not true in practice
30. Semi-strong form efficiency:
Prices of shares incorporate all publicly available
information
No investor can earn excess returns from trading rules
based on publicly available information
The semi-strong form says that prices fully reflect all
publicly available information and expectations about the
future.
This suggests that prices adjust very rapidly to new
information, and that old information cannot be used to
earn superior returns.
The semi-strong form, if correct, repudiates fundamental
analysis.
Most studies find that the markets are reasonably efficient
in this sense, but the evidence is somewhat mixed.
31. Weak form efficiency:
prices incorporate information about past prices
No investor can earn excess returns by developing
trading rules based on historical price or return
information.
If stock price changes are random, then past prices
cannot be used to forecast future prices.
Prices should change very quickly and to the correct
level when new information arrives.
This form of the EMH, if correct, repudiates
technical analysis.
Most research supports the notion that the markets
are weak form efficient.
33. Sources of Finance
Internal:
Owner’s investment
(start up or additional
capital)
Retained profits
Sale of stock
Sale of fixed assets
Debt collection
External (raised from
an outside source)
External:
Bank Loan or
Overdraft
Additional Partners
Share Issue
Leasing
Hire Purchase
Mortgage
Trade Credit
Government Grants
Dr. Kwame O. Amoako
34. Internal Sources
Owner’s investment
This is money which
comes from the
owner/s own savings
It may be in the form
of start up capital -
used when the
business is setting up
It may be in the form
of additional capital –
perhaps used for
expansion
This is a long-term
source of finance
Advantages
Doesn’t have to
be repaid
No interest is
payable
Disadvantages
There is a limit to
the amount an
owner can invest
Dr. Kwame O. Amoako
35. Internal Sources finance
Retained Profits
This source of finance is
only available for a
business which has been
trading for more than
one year
It is when the profits
made are ploughed back
into the business
This is a medium or long-
term source of finance
Advantages
Doesn’t have to be repaid
No interest is payable
Disadvantages
Not available to a new
business
Business may not make
enough profit to plough back
Dr. Kwame O. Amoako
36. Internal Sources
Sale of Stock
This money comes in
from selling off unsold
stock
This is what happens in
the January sales
It is when the profits
made are ploughed
back into the business
This is a short-term
source of finance
Advantages
Quick way of raising
finance
By selling off stock it
reduces the costs
associated with holding
them
Disadvantages
Business will have to
take a reduced price for
the stock
Dr. Kwame O. Amoako
37. Internal Sources
Sale of Fixed Assets
This money comes in from
selling off fixed assets,
such as:
a piece of machinery
that is no longer
needed
Businesses do not always
have surplus fixed assets
which they can sell off
There is also a limit to the
number of fixed assets a
firm can sell off
This is a medium-term
source of finance
Advantages
Good way to raise finance
from an asset that is no
longer needed
Disadvantages
Some businesses are
unlikely to have surplus
assets to sell
Can be a slow method of
raising finance
Dr. Kwame O. Amoako
38. Internal Sources
Debt Collection
A debtor is someone who
owes a business money
A business can raise finance
by collecting the money
owed to them (debts) from
their debtors
Not all businesses have
debtors ie those who deal
only in cash
This is a short-term source
of finance
Advantages
No additional cost in
getting this finance, it is
part of the businesses’
normal operations
Disadvantages
There is a risk that debts
owed can go bad and
not be repaid
Dr. Kwame O. Amoako
39. External Sources
Bank Loan
This is money
borrowed at an
agreed rate of
interest over a
set period of
time
This is a medium
or long-term
source of finance
Advantages
Set repayments are spread
over a period of time
which is good for
budgeting
Disadvantages
Can be expensive due to
interest payments
Bank may require security
on the loan
Dr. Kwame O. Amoako
40. External Sources
Bank Overdraft
This is where the
business is allowed
to be overdrawn on
its account
This means they can
still write cheques,
even if they do not
have enough money
in the account
This is a short-term
source of finance
Advantages
This is a good way to cover
the period between money
going out of and coming into
a business
If used in the short-term it is
usually cheaper than a bank
loan
Disadvantages
Interest is repayable on the
amount overdrawn
Can be expensive if used over
a longer period of time
Dr. Kwame O. Amoako
41. External Sources
Additional Partners
This is sources of
finance suitable for
a partnership
business
The new partner/s
can contribute extra
capital
Advantages
Doesn’t have to be
repaid
No interest is payable
Disadvantages
Diluting control of the
partnership
Profits will be split more
ways
Dr. Kwame O. Amoako
42. External Sources
Share Issue
This is sources of
finance suitable for
a limited company
Involves issuing
more shares
This is a long-term
source of finance
Advantages
Doesn’t have to be repaid
No interest is payable
Disadvantages
Profits will be paid out as
dividends to more
shareholders
Ownership of the company
could change hands
Dr. Kwame O. Amoako
43. External Sources
Leasing
This method allows a
business to obtain assets
without the need to pay a
large lump sum up front
It is arranged through a
finance company
Leasing is like renting an
asset
It involves making set
repayments
This is a medium-term
source of finance
Advantages
Businesses can have the
use of up to date
equipment immediately
Payments are spread over a
period of time which is
good for budgeting
Disadvantages
Can be expensive
The asset belongs to the
finance company
Dr. Kwame O. Amoako
44. External Sources
Hire Purchase
This method allows a business to
obtain assets without the need to
pay a large lump sum up front
Involves paying an initial deposit
and regular payments for a set
period of time
The main difference between hire
purchase and leasing is that with
hire purchase after all repayments
have been made the business
owns the asset
This is a medium-term source of
finance
Advantages
Businesses can have the use of
up to date equipment
immediately
Payments are spread over a
period of time which is good
for budgeting
Once all repayments are made
the business will own the asset
Disadvantages
This is an expensive method
compared to buying with cash
Dr. Kwame O. Amoako
45. External Sources
Mortgage
This is a loan secured on
property
Repaid in instalments
over a period of time
typically 25 years
The business will own the
property once the final
payment has been made
This is a long-term source
of finance
Advantages
Business has the use of the property
Payments are spread over a period of
time which is good for budgeting
Once all repayments are made the
business will own the asset
Disadvantages
This is an expensive method compared
to buying with cash
If business does not keep up with
repayments the property could be
repossessed
Dr. Kwame O. Amoako
46. External Sources
Trade Credit
Trade credit is
summed up by the
phrase:
buy now pay later
Typical trade credit
period is 30 days
This is a short-term
source of finance
Advantages
Business can sell the goods
first and pay for them later
Good for cash flow
No interest charged if money
is paid within agreed time
Disadvantages
Discount given for cash
payment would be lost
Businesses need to carefully
manage their cash flow to
ensure they will have money
available when the debt is due
to be paid
Dr. Kwame O. Amoako
47. External Sources
Government Grants
Government
organisations such as
venture capital offer
grants to businesses,
both established and
new
Usually certain
conditions apply, such
as where the business
has to locate
Advantages
Don’t have to be repaid
Disadvantages
Certain conditions may
apply e.g., location
Not all businesses may be
eligible for a grant
Dr. Kwame O. Amoako
48. Factors Affecting Choice of
Source of Finance
The source of finance chosen will depend on
a number of factors:
Purpose – what the finance is to be used
for
Time Period – how long the finance will be
needed for
Amount – how much money the business
needs
Ownership and Size of the business
Dr. Kwame O. Amoako
49.
50. what is the capital of a company made up?
Capital of a
company
Borrowing
Money invested
by the owners
Bonds
Long-term
bank
loans
Shares,
Stock or
Equity
SHARES = EQUITY CAPITAL
There are 2 main types of shares:
1. ORDINARY SHARES
2. PREFERENCE SHARES
Dr. Kwame O. Amoako
52. Ordinary Shares
Shares,
Stock or
Equity
Company share capital
ALWAYS includes
ordinary shares
Owners of ordinary shares
They technically own the
company
FEATURES
ENTITLEMENTS
Can be fully paid – The
shareholder has paid all of
the initial capital reflecting
the full value of the shares
owned.
Can be partly paid - The
shareholder has not paid
the entire initial capital.
The shareholder has an
obligation to pay the
remaining amount when the
company calls upon them
to do so. This is also
known as contributing
shares.
Full risk and reward of investing
(Shareholders do well if the company
does and vice-versa)
Entitled to a ‘yes’ or ‘no’ vote to
each resolution at company
meetings
Receive dividends declared by the
company
Half-yearly or quarterly
They ratify the dividend
amount proposed by the
directors before they are
declared payable
but dividends are not
always paid or as large as
liked
53. TYPES OF PREFERENCE SHARE
Preference
Shares
Shares,
Stock or
Equity
SOME companies have
preference shares as well
as ordinary shares
NO VOTING ENTITLEMENTS
RECIEVE FIXED DIVIDENDS
PAID BACK BEFORE ORDINARY
SHAREHOLDERS IF COMPANY IS
WOUND UP
FEATURES/ENTITLEMENT
S
CUMULATIVE
Dividend entitlements accumulate if
they are not paid one year
NON-CUMULATIVE
If a company does not pay out
dividends one year, these
shareholders miss out on this
dividend
PARTICIPATING
Entitle the holder to a basic dividend
but the directors can award a bigger
dividend in a year when the profits
exceed a certain level. i.e. preference
shareholder can participate in
bumper profits.
CONVERTIBLE
Carry an option to convert into the
ordinary shares of the company at
set intervals and on pre-set terms.
REDEEMABLE
Have a date at which the nominal
value may be redeemed - paid back
to the preference shareholder and
the shares cancelled.
Articles of Association sets
out precisely how they differ
from ordinary shares.
‘Hybrid Securities’ – they
have characteristics of bonds
and equities.
Preference shares have
legal priority (seniority) over
ordinary shareholders in
respect of their dividends and
collapse of the company (will
get their money back before
ordinary shareholders)
Non-voting - cannot vote at
the General Meetings of the
company
Pay a fixed dividend each
year, the amount set when
first issued and has to be
paid before dividends on
ordinary shares can be paid